PAUL KRUGMAN: “LOOK OUT, THE MARKET CAN ALSO EXIST WITHOUT DEMOCRACY”

The famous American columnist has the task of opening the Festival

“Despite encouraging signals in 1989, authoritarian capitalism has been shown to be solid in China and in Russia, whereas the United States risked seeing the collapse of freedom. The future lies not so much in the GDP as in the type of people who live in and speak for the world”

Twice a week the opinions and theories outlined in articles by Paul Krugman and published in the “New York Times” are read with attention by the most powerful men and women in the world. Today, the task of opening the third Trento Festival of Economics today went to Krugman, the big man with a beard. The American columnist and leader writer who teaches economics and international relations at the University of Princeton and the London School of Economics, after having also transmitted his knowledge at the University of Yale, MIT and the University of Stanford and whose research activities concentrate on international trade, finance and currency crises, was called on to respond to questions regarding the market and ideologies. Tito Boeri set him a question that was anything but easy: whereas planned economies cannot survive without an ideology, market economies would not seem to require ideological support. May this mean – and the first and clear reference was to China, to then also include Russia - that markets without democracy can last forever? An epoch-making question, one might think, defused by an initial gesture by Krugman: “I shall make a major gesture of freedom and take off my jacket, given the warmth of the room”, he said, getting smiles and applause. What is more, his audience consisted not just of those in the Depero room, which was packed, but also of spectators in the two neighbouring rooms with video link-up, where every seat was filled. The Festival of Economics could not have had a better beginning, commented Tito Boeri. It was indeed Boeri who presented Krugman, first of all as a convinced democratic. This is demonstrated in a book just published by Laterza, “The Conscience of a Liberal”, which Krugman referred to frequently in his “lesson”, eloquently entitled: “Has the time for democracy passed?”. Let us go straight away to the solution of the “mystery”. Krugman concluded in this way: “It is not written anywhere that economic progress necessarily leads to democracy, as one might be tempted to think, given that all the richest countries in the world have democratic systems. So the future does not lie so much in the per capita GDP of the world, so much as in the type of people who live in this world”. There were indeed a number of pessimistic notes in Krugman’s speech, although in the last few years he has stated that he is convinced – backed up by an enthusiasm for civil rights that is still clear today – that democratic participation is a value in itself, also adding that it is not so much economics that has conditioned politics in the last few years – especially in the United States – so much as rather the contrary. So, “what do we know today about the possibility of developing democracy throughout the world?” Krugman asked himself and the audience. “Clearly” – he said – “I think back to 1989, a year of miracles, with the collapse of ideologies but also the dream of Tienanmen Square. I think back to what seemed like signs of growing democracy, to the extent that Fukuyama was able to talk about the end of an era. In short it seemed inescapable that the market would move towards democratic societies, everywhere”. Instead, it is not only countries like Cuba and North Korea, which could be considered marginal, which have taken another direction – added Krugman. “An authoritarian form of capitalism persists, the extent of which is known to us all, the most obvious examples being China and Russia. Certainly, in Latin America we can see encouraging signs of democracy, but overall our certainties, as compared to the years immediately after 1989, are a great deal less solid”. Krugman then listed a series of doubts to be considered, at times presented as facts. “Is it enough that all the rich countries today are free? No, because China is growing, it does not have a democracy and paradoxically while having seen dizzy growth after 1989, it has and will continue to have high levels of poverty. Its force comes from its population, but when China becomes the most important economy in the world – in 2022 - it will have reached the level currently existing in Russia. We are moving towards a world where some major superpowers may not be democratic. Hence it is not always true that wealth means democracy and China is the demonstration of this. What is more, is it true that democracies have greater economic success? Not necessarily. Unfortunately this is not always the case. In Brazil, a country which is fortunately democratic today, economic success also took place under the military regime. It is true that the worst economic disasters come from countries with authoritarian regimes and dictatorships, but the statistics do not show that democracy and the market go hand in hand”. In short, there were both ideas and doubts in the analysis of Krugman, who also recalled the case of Mexico: arriving at a true democracy when the magnetic role of the USA, in economic terms, was clear and recognised by stipulation of the NAFTA. Finally, Krugman took a look at his homeland, the United States. At this point his liberal tendencies and enthusiasm for civil rights were clear. “There is indeed another question we should ask ourselves” – he said – “and it is this: how secure is the democratic nature of rich advanced countries? Between 2002 and 2003 my country risked seeing the collapse of democracy. I will never stop saying what the figure of Bush and a specific political movement characterised only by the desire for power has represented, in negative terms. There are innumerable pressure groups and lobbies. There were and still are many signals indicating the fragility of democracy, starting from the fact that the major telephone companies continue to request future amnesty for behaviour resulting from specific requests of the White House. I myself would be surprised if I had not been intercepted and spied on in the last few years”.